BW Real 500 - Non Financial #5: HPCL's Delivering Growth

Navigating through a challenging environment, Hindustan Petroleum Corporation (HPCL), the second largest LPG marketer in India, delivered its highest ever profit after tax (PAT) of Rs.10,664 crore during financial year 2020-21, crossing the Rs. 10,000-crore-mark for the first time. The significant improvement in the profitability in spite of challenges due to the Covid-19 pandemic was a result of efficient planning, robust operational performance and effective supply chain management, said Mukesh Kumar Surana, Chairman and Managing Director, HPCL. Thanks to these efforts, HPCL held on to its fifth rank on the list of BW 'Real' 500 Companies.  

Speaking about the fantastic financial performance of HPCL, Surana explained: "It was further helped by favourable exchange rate variations and inventory gains. HPCL achieved gross sales of Rs. 269,243 crore during the year." HPCL, said Surana, continues to return value to shareholders consistently with robust balance sheet and cash flows.

The Board of Directors of HPCL proposed payment of a final dividend of Rs. 22.75 per share for financial year 2020-21. To create value for the stakeholders, HPCL initiated its share buyback programme in November 2020 through market transactions for a maximum value of Rs. 2,500 crore at a maximum rate of Rs. 250 per share. As of 31st March 2021, HPCL bought 7.18 crore shares at a total value of Rs. 1,986 crore. The buyback programme was successfully completed on its expiry date of 14 May 2021. Overall, HPCL bought back 10.53 crore equity shares utilising a total amount of Rs. 2,954 crore which included all transaction costs and taxes.

Future Energy Mix

Also, in FY21, HPCL acquired the balance 50 per cent of the equity in its JV, HPCL Shapoorji Energy (HSEPL) making it a wholly-owned subsidiary of HPCL. This was done considering the importance of natural gas in the future energy mix of the country. HSEPL is setting up five MMTPA capacity LNG regasification terminal at Chhara in Gujarat for which construction is already underway, the company said. 

During 2020-21, both HPCL refineries at Mumbai and Visakh maintained sound physical performance with a combined capacity utilisation of 104 per cent and throughput of 16.42 MMT despite the demand contraction and constraints due to the Covid-19 pandemic. Adapting continually to the unprecedented challenges from Covid-19, effective logistics management, sound crude sourcing plans and speedy evacuation of products helped HPCL exhibit a sturdy performance, Surana said. 

Recalling the arduous times during Covid-19, Surana said HPCL continued its operations without any disruptions to ensure availability of petroleum products for essential services to public while ensuring the safety and wellbeing of its stakeholders and the workforce. "To quote an example, HPCL delivered, on an average, more than 15 lakh LPG cylinders per day during the peak lockdown period ensuring wellbeing of the consumers and safety of the workforce to meet the sharp increase in demand of cooking gas during this period," he said. 

Highest Ever LPG sale

In retail sales, total sales volume of 22 MMT was achieved with the help of an increase in the market share in total motor fuels (TMF) sales among the PSU OMCs. As for sales of LPG, HPCL achieved its highest ever sales of 7.41 MMT, with growth of 5.3 per cent in FY21. 

HPCL also commissioned 2,158 new retail outlets, which was the highest in a year taking the total retail outlets to 18,634 as of 31 March 2021. Last-mile delivery capability of HPCL was further enhanced with the commissioning of 112 new LPG distributorships during the year taking total number of LPG distributors to 6,192. HPCL is also working with a number of organisations including startups to provide end-to-end EV charging infrastructure across the country to provide multi-fuel options to the customers.